A Surge in Customs Duties
Ireland has experienced a significant financial windfall due to Brexit, with customs duties skyrocketing as a result of new controls and levies on imports from Great Britain. This surge in tax revenue marks a substantial boon for the Irish economy.
Prior to Brexit, Great Britain enjoyed customs-free exports to Ireland and the wider EU as a member of the single market and customs union. However, Boris Johnson's decision to pursue a hard Brexit led to the imposition of new controls, checks, and duties on exports to the EU.
Data from Ireland reveals a staggering 90% increase in customs duty receipts between 2020 and 2021, coinciding with the implementation of Brexit measures. Even after accounting for the pandemic's impact, a notable upward trend in revenues emerges when comparing the post-Brexit years with pre-Brexit figures.
In 2021, customs duty receipts surged by €178 million, representing a 52% increase over 2019. Subsequent years witnessed even sharper rises, with an additional €617 million in 2022 (up 80%) and a further 72% increase in 2023.
The Irish Revenue Commissioners attributed this surge primarily to Brexit, noting the transformation of Great Britain into a third country in 2021. Great Britain emerged as the top dispatch country for both customs duties and imported goods.
Importantly, customs duties collected on imports from Great Britain accounted for nearly half (45%) of Ireland's total customs revenues in 2023, totaling approximately €264 million. Preliminary revenue reports suggest that Brexit has been the primary driver behind the surge in customs revenues over the past three years.
While not all goods attract tariffs under the Brexit trade deal, some tariff revenues may originate from non-EU goods stored in Great Britain for distribution to Ireland and the UK. For instance, clothing made in countries like India or Bangladesh and sold in stores such as Penneys in Ireland may contribute to customs revenues.
The Revenue Commissioners' report confirmed this trend, highlighting the shift in customs duty collection responsibilities from the UK to Ireland post-Brexit.
While Ireland stands to benefit from the Brexit bonanza, EU regulations stipulate that 25% of collected duties are retained by the member state, with the remainder allocated to the bloc's central budget.
The surge in customs income encompasses various categories, with articles of apparel and clothing accessories leading the pack, followed by plastics, vehicles, and footwear. The impact of Brexit on customs duties underscores its far-reaching implications for trade dynamics and fiscal policies across the EU, particularly in countries like Ireland, which maintain significant trade ties with Great Britain.